# Bollinger Bands (Bollinger Bands)

Category: volatility

Bollinger Bands consist of a middle SMA(20) band with upper and lower bands at ±2 standard deviations. They measure volatility and relative price levels.

## Formula

```text
Middle Band = SMA(20)
Upper Band = SMA(20) + (2 × StdDev)
Lower Band = SMA(20) - (2 × StdDev)
```

## Common strategies

- Mean reversion: Price touching the lower band may bounce back to the mean; upper band may reverse down.
- Bollinger squeeze: Bands contracting tightly indicates low volatility, often followed by a breakout.
- Band ride: In strong trends, price can "ride" the upper or lower band for extended periods.

## How CommonQuant uses it

CommonQuant pre-calculates Bollinger Bands(20, 2) on all timeframes. DSL strategies can reference bb_upper(), bb_middle(), and bb_lower().

## Frequently asked questions

### What is a Bollinger squeeze?

A squeeze occurs when the upper and lower bands come very close together, indicating low volatility. It often precedes a sharp breakout.

### Are Bollinger Bands good for crypto?

Yes, especially for detecting volatility expansion. Crypto's high volatility makes the bands wider, and squeezes often precede major moves.

Canonical: https://commonquant.ai/learn/indicators/bollinger-bands